Bharti Airtel to acquire Tata Teleservices for nothing

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Just as Tata Group was planning to shut down its telecom arm, it has come as a huge relief for the Group as India's largest telecom operator Bharti Airtel has agreed to acquire the mobile business of Tata Teleservices.

It was observed that the Boards of Tata Sons, TTSL, and TTML had also given their approval.

The transaction will be done on a "debt-free cash-free" basis, the companies said in their joint statement, although Bharti Airtel will take over a "small portion" of Tata's unpaid spectrum liabilities.

As a part of this transaction, Airtel will take over Tata's operations in 19 circles across the country, two of which are under TTML and the rest are under TTSL.

"This is a significant development towards further consolidation in the Indian mobile industry and reinforces our commitment to lead India's digital revolution by offering world-class and affordable telecom services through a robust technology and solid spectrum portfolio", said Sunil Mittal, chairman of Bharti Airtel.

The deal with Tata Teleservices is probably the sweetest deal for Bharti Airtel, which has made over five acquisitions in the last few years. The telecom liability stands at Rs 54,617 crore which includes Tata Teleservices'debt of Rs 36,667 crore, DoCoMo payout of Rs 8,450 crore and spectrum costs of Rs 9,500 crore. The customers of Tata will be able to enjoy India's widest and fastest voice & data network, and bouquet of Airtel's best-in-class products and services. Finding the right home for our longstanding customers and our employees has been the priority for us.

Bharti Airtel also stands to gain from the acquisition of Tata Tele, as it will get an instant boost in the size of its customer base.

Earlier this year, Vodafone India and Idea Cellular agreed to merge their operations to create the country's largest telecom operator worth of more than Dollars 23 billion (roughly Rs 1,51,153 crore) with 35 per cent market share. Tata employees will be demerged on the lines of the two businesses CMB and EFL (Enterprise and Fixed Line and Broadband), and will be moved after an optimal manpower planning.

With this deal, Airtel will have over 32 crore customers, way below 40 crore users with the merged Vodafone-Idea entity. "Securities Private Limited is the financial advisor to Tata".

The agreement, signed in 2008, failed to attract enough customers and Docomo triggered an option to sell its stake six years later after incurring losses.

In case of individual companies, it believes that Bharti Airtel, Vodafone-Idea Cellular and Reliance Jio could, combined, account for over 90 percent of industry's revenues.

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